2014 (2) TMI 1254 - HC - Service Tax

Recovery of dues - failure to deposit the amount on the ground that appeal has been filed - Petitioner contended that the impugned notice is based or founded upon circular dated 1st January, 2013, which has been quashed and set aside by different High Courts. Also the authorities cannot proceed to recover the amount when the same is the subject matter before this Court in the earlier writ petition. Held that - the petitioner had an opportunity to deposit the dues as indicated by this Court and having failed to do so, there is no impediment and fetter put on the department to proceed with the recovery of the said amount. The Rajasthan High Court in the case of Manglam Cement Ltd. v. Superintendent of C. Ex. Range-III, Kota 2013 (4) TMI 102 - RAJASTHAN HIGH COURT , categorically held that mere filing of an appeal does not operate as stay or suspension of an order appeal against. The interim order sought for was refused at the admission stage. Therefore, the petitioner cannot say that the authorities are denuded of its power to take steps for recovery of the amount. The petitioner has tried to demonstrate before this Court that certain observations were made when the earlier writ petition was taken up, which inevitably suggest that the Court was conscious of the situation that the authorities shall not take any coercive measures pending the said writ petition. Though this Court finds that the department cannot take advantage of a circular, which is already quashed and set aside by the High Court, but for reasons narrated above, this Court does not intend to interfere with the said recovery notice, even if the circular appears to be non est. Furthermore if certain event has taken place and the observation is made by the Court orally, the same Hon ble judge can only modify/clarify or indicate the happenings of such event and not by another judge or the higher forum. Since there is no interim order passed by the Court restraining the department from proceeding to recover the amount, the contemplation at the behest of the department for taking measures to recover the said amount cannot be faulted with. - Decided against the petitioner

Summary

Issues:
Challenge to service tax demand confirmation, confusion between "dues" and "demand," validity of recovery notice based on quashed circular, applicability of Rajasthan High Court judgment on recovery proceedings, refusal of interim protection, failure to deposit dues, authority to proceed with recovery, impact of pending appeal on recovery proceedings, lack of stay on recovery order, absence of interim order restraining recovery, reliance on oral observations, absence of merit in the writ petition.

Analysis:
1. The petitioner challenged the confirmation of service tax demand for the period from May 2006 to June 2010. The Court admitted the writ petition but refused interim relief, allowing the petitioner to deposit dues within three months to prevent coercive actions by the respondents.
2. A confusion arose regarding the terms "dues" and "demand" during subsequent proceedings on April 3, 2013, questioning the scope of liability beyond the adjudicated amounts by the Assessing Authority.
3. The validity of a recovery notice issued on January 10, 2014, based on a quashed circular, was contested in the writ petition. The petitioner argued that recovery should not proceed while the matter was sub judice.
4. The petitioner relied on a Rajasthan High Court judgment to argue against initiating recovery proceedings when an application seeking waiver of duty deposit was pending, emphasizing that the department should not benefit from its delays.
5. The Court distinguished the Rajasthan High Court judgment's applicability to the present case, emphasizing the petitioner's failure to deposit dues despite the opportunity granted by the Court, allowing the department to proceed with recovery.
6. The Court highlighted that the mere filing of an appeal does not automatically stay or suspend an order under appeal, thus rejecting the argument that the authorities were barred from recovery actions.
7. Despite the petitioner's contentions regarding oral observations and communication by their advocate, the Court found no basis to modify its orders or restrain the department from recovery, as no interim protection was granted.
8. With no stay order in place, the Court upheld the validity of the recovery notice, dismissing the writ petition for lack of merit and ruling in favor of the respondent.